3.2 Monetary Policy Flashcards
1
Q
What is money?
A
Anything that people regularly use to buy goods and services, and for the repayment of debts
2
Q
What are the four functions of money?
A
- Medium of exchange
- Store of value
- Unit of account
- Standard for deferred payments
3
Q
What is monetary policy?
A
Monetary policy involves the manipulation of the bank rate, the supply of money, or the exchange rate, to influence economic performance
4
Q
What is the monetary transmission mechanism?
A
The process by which changes in monetary policy influence market rates of interest, asset prices, confidence/expectations and the exchange rate; all of these variables affect overall macroeconomic performance and the rate of inflation in particular
